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Mercedes To Retain Global Premium Sales Crown In 2017

Mercedes To Retain Global Premium Sales Crown In 2017.

First Place Likely For Years To Come.

Mercedes, which grabbed the title of world champion premium car maker from BMW in 2016, looks likely to retain it in 2017 and hold on to the crown for the foreseeable future, led by its performance in China in particular and selling lots of SUVs in general, according to a report.

But the fat profits made by the top three German manufacturers, Mercedes, BMW and VW’s Audi, will come under pressure as diesels became a less acceptable way of achieving fuel economy, and expensive electric cars are required to meet tightening government regulations on CO2 emissions, particularly in Europe.   

The report, from the University of Duisberg-Essen’s Center for Automotive Research (CAR), said in 2016 Mercedes sold 2,084,000 premium vehicles, BMW 2,003,000 and Audi 1,868,000. For 2017, CAR believes Daimler’s Mercedes will retain the crown with sales of 2,250,000, followed by BMW’s 2,100,000 and Volkswagen subsidiary Audi with 1,900,000.

“In the global competition for premium brands, Mercedes will continue to lead the world over the next few years and keep the main competitors BMW and Audi at a distance,” said Professor Ferdinand Dudenhoeffer, director of CAR.

Dudenhoeffer said Mercedes is set to become the biggest selling premium brand in China this year for the first time, supplanting long-term winner Audi.   

“All three top premium brands are growing significantly faster in sales than the world market. A major reason for the faster growth is the extension of the model line to SUV and compact vehicles,” Dudenhoeffer said. 

Mercedes has won the best selling crown despite the continued weakness of Smart city car sales, which contrasts with BMW’s small car subsidiary Mini. Smart contributes 5% of Mercedes sales while Mini captures 15% of BMW’s, Dudenhoeffer said.

Mercedes also leads the profit race, with 3,291 euros ($3,935) per car, followed by BMW’s 3,250 euros ($3,465) and Audi 3,159 euros ($3,365). That translates into profit margins of 9.1%, 8.9% and 8.2%.

Because of the success of Mercedes product program, and the fact it takes years to revamp, the company is set fair for the foreseeable future.

“The change in product portfolios takes several years in the auto industry. As a result, there is no change in the position among the three major premium manufacturers in the next three years,” Dudenhoeffer said.

There is though a major hurdle for these top German marques to jump. All three rely on a big majority of their sales from diesel power, which is coming under pressure from politicians because of the fallout from VW’s dieselgate scandal, and the mounting evidence that diesels present an unacceptable health risk to city populations.

As European regulations force car makers to raise fuel efficiency, diesel was thought to be the short-term route to achieve this. But now they might have to fall back on very expensive electric and hybrid power, or spend much more on making gasoline engines more efficient, or both.

“All three are vulnerable to diesel dependency in Europe. An important factor for all three therefore remains the rapid transition to electromobility,” Dudenhoeffer said.

Is there a chance of ending German domination of this exotic market? Not much, according to Dudenhoeffer.

“Not in 5 years, but maybe in 10. Then there is a real chance that Tesla (Inc) and (Tata Motors of India’s) JaguarLandRover will be head on with the big Germans. Lexus, Infiniti, Cadillac, you name it, will have no chance to make important inroads in the real premium market.”

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